Corporate Governance
1. Group structure
2. Operative organisation
3. Applicable laws and recommendations
4. Annual General Meeting
5. Board of Directors
6. CEO and Deputy CEO
7. Other management
8. Insider issues
9. Auditor
10. Risk management and internal control
11. Investor Relations and Communications
1. Group structure
The CapMan Group is comprised of CapMan Plc and its subsidiaries and associated companies. The most significant subsidiaries are CapMan Capital Management Ltd, CapMan Real Estate Ltd, CapMan AB, CapMan Invest A/S, CapMan Norway AS, CapMan (Guernsey) Ltd, CapMan Mezzanine (Guernsey), CapMan (Guernsey) Buyout VIII GP Ltd, CapMan (Guernsey) Life Science IV GP Ltd, CapMan (Guernsey) Technology 2007 Limited and Realprojekti Oy. The subsidiaries act as fund management and/or advisory companies for Group funds making direct investments in portfolio companies or in real estate assets. The voting power in all subsidiaries are 100% owned by CapMan Plc except CapMan Real Estate Oy and Realprojekti Oy, which are 80% owned by CapMan Plc. The most significant affiliated company is Access Capital Partners S.A, which is 35% owned by CapMan Plc.
2. Operative organisation
CapMan provides management and advisory services in two main business areas: CapMan Private Equity (funds making investments in portfolio companies) and CapMan Real Estate (private equity real estate funds making investments in real estate assets and real estate consulting). Investments by CapMan funds investing in portfolio companies focus mainly on the Nordic countries in three investment areas, which are middle market buyouts (CapMan Buyout), technology investments (CapMan Technology) and life science investments (CapMan Life Science). The investment focus of CapMan real estate funds is on real estate targets in Finland.
The Group has nominated teams for each investment area. The teams are responsible for identifying new investment targets, making investments, supporting value creation of portfolio companies and carrying out exit projects. The Groups has three service teams (Investor Services, Internal Services and Human Resources) responsible for the Group's and funds finances and administration, fundraising, fund product development, fund and shareholder investor relations, communications, legal matters, corporate governance, business development and HR management.
3. Applicable laws and recommendations
CapMan Plc complies with the Recommendation for Corporate Governance of Listed Companies issued by the Helsinki Exchanges, the Finnish Central Chamber of Commerce and the Confederation of Finnish Industry and Employers on 2 December 2003. The main points of the Recommendation and compliance are described in more detail in the text below. The Board of Directors of CapMan Plc is responsible for verification of the company’s principles on corporate governance.
4. Annual General Meeting
The highest power of decision is the Annual General Meeting (AGM) of CapMan Plc, where the shareholders can exercise their rights to speak and vote. The Board of Directors convenes the AGM annually, no later than the end of May. The AGM decides on the tasks specified by the law and CapMan’s Articles of Association, which are presented on the company’s Internet pages under the section Articles of Association.
Invitation to the AGM is published in at least one national newspaper determined by the Board of Directors no earlier than three months and no later than 17 days prior to the AGM. The proposals of the Board of Directors to the AGM are presented in the invitation.
The candidates for the Board of Directors who have been notified to the Board are disclosed prior to the AGM, either in the invitation or in a separate bulletin after publication of the invitation, provided that the candidates have given their written consent to the election and are supported by at least 10% of the total votes attached to the shares of the company.
In addition, the proposal of the Board concerning the company’s auditor is published prior to the Meeting. In the absence of exceptional reasons for non-attendance, it is the company’s objective that all of the members of the Board, candidates for election to the Board and the CEO shall be present at the AGM.
5. Board of Directors
Composition and term
The members of the Board of Directors of CapMan Plc are elected by the AGM for a one-year term, which commences at the closing of the Meeting and continues until the closing of the following AGM. The Board elects the Chairman and the Vice Chairman among themselves.
According to the Articles of Association the Board of Directors comprises between three and nine members, who do not have deputy members. There are six members of the Board at present. The Board met eight times in 2007 and the average participation rate of its members was 100%.
Duties and responsibilities
The duties and responsibilities of the Board of Directors are determined for the main part by the Finnish Companies Act. The Board is responsible for the administration and proper organisation of the Company’s operations and decides upon exceptional or far-reaching matters, taking into account the extent and quality of the Company’s operations. Examples of such matters include the adoption of Group business strategy and approval of large investments of CapMan Plc. The Board has general authority to render decisions on all of those company matters which, on the basis of the law or the Articles of Association, are not stipulated to be decided or carried out by another executive body. In addition to the tasks set forth by the law the Board has confirmed a charter for Board work. It includes:
1. An annual review program ensuring that the Group has:
- proper strategic goals
- identified the major risks and has a program for their management
- sufficient compliance control of important areas identified by the Board, and
- proper corporate values
2. An annual self-evaluation of Board performance and review of the charter for Board work
The Chairman of the Board is responsible for overseeing that the Board fulfils the tasks specified by the law and the Articles of Association.
Board committees
With respect to the size of the company and its Board of Directors, the Board of CapMan Plc has decided not to establish any committees. However, the Board has decided to pay special attention in its own work to risk management, external auditing and internal control.
Remuneration
The remuneration of the members of the Board of Directors is decided by the AGM. In 2008 the AGM resolved to pay monthly compensation of €4,000 to the Chairman and €3,500 to the Vice Chairman and other members of the Board. Compensation is not paid to those Board members who are employed by CapMan Group. The total remuneration paid to the members of the Board in 2007 was €136,500.
Members of the Board may also be remunerated for Board work with stock options in accordance with the decision of the AGM, in which case shareholders have the opportunity to evaluate whether such remuneration is in their interest.
Members of the Board and their independence of the company
The AGM held on 27 March 2008 decided that the Board consists of six members. Sari Baldauf Tapio Hintikka, Lennart Jacobsson, Teuvo Salminen (Vice chairman) and Ari Tolppanen (Chairman) will continue as Board members. Conny Karlsson was elected as new member to the Board of Directors.Their personal and background information is presented under the section Board of Directors.
The majority of members of the Board (Sari Baldauf, Tapio Hintikka, Conny Karlsson and Teuvo Salminen) are independent of CapMan Plc. Lennart Jacobsson and Ari Tolppanen are not independent of the company, as they are employed by CapMan Group as well as major shareholders in the company.
6. CEO and Deputy CEO
The Board of Directors elects the CEO and Deputy CEO of CapMan Plc. The CEO leads and oversees the company’s operations in accordance with the instructions and orders set forth by the Companies Act and the Board of Directors. As a rule, the CEO is independently responsible for deciding and implementing matters concerning the company’s operative activities and ordinary business. In 2007, the CEO of CapMan Plc was Heikki Westerlund and the Deputy CEO was Olli Liitola.
The CEO appoints the Company's heads of teams. Recruitments of direct subordinates are submitted by the CEO to the Board of Directors.
Remuneration
The central conditions of the CEO’s employment are specified in writing in the service contract, which is approved by the Board of Directors. In 2007, CEO Heikki Westerlund received salary and other remuneration totalling €349,461 and Deputy CEO Olli Liitola received €183,976.
The retirement age and retirement benefits for the CEO and Deputy CEO are specified according to the statute on employee pensions. The term of notice for the CEO, Deputy CEO and the company is 12 months, during which time the normal monthly salary is paid.
7. Other management
Management Group
The Management Group of CapMan Plc is responsible for the preparation of proposals on matters relating to CapMan Group's business to the CEO and Board of Directors. The composition of the Management Group and the responsibities and background information of its members is presented on the Company's website at www.capman.com.
In 2007, the salaries and remuneration paid to the Management Group totalled €2,050,615. The members of the Management Group and their personal and background information are presented under the section Management Group.
Investment Committee
CapMan also has Investment Committees, which are comprised of the CEO, Senior Partners and Partners of the Company, for its funds. The Investment Committees make investment presentations and proposals on new investments and exits from portfolio companies to the funds’ Advisory Boards, and are not involved in managing the operative activities of the Company. The CEO or person appointed by the CEO act as chair of the funds' Investment Committees. The Chairpersons are CEO Heikki Westerlund is Chairman of CapMan Equity VII and CapMan Buyout VIII funds' Investment Committees, Lennart Jacobsson is Chairman of CapMan Technology 2007, Jan Lundahl is Chairman of CapMan Life Science IV fund's Investment Commitee and Jukka Iivari is Chairman of CapMan Real Estate I and CapMan RE II funds' Investment Committee.
8. Insider issues
CapMan Plc complies with the guidelines for insiders issued by the Helsinki Stock Exchange that entered into force on 1 January 2006. CapMan has supplemented the general guidelines with its own set of internal insider guidelines, which are in part stricter than the general guidelines. The public insider registers are regularly distributed to permanent insiders for inspection. The Group’s Senior Legal Counsel is responsible for insider issues.
The public insiders of CapMan Plc are the members of the Board of Directors, the CEO, Deputy CEO, members of Management Group and auditors including the auditor in charge, in accordance with the Securities Market Act. In addition, the company specifi c insider register includes the CEO’s Executive Assistant, CFO, Chief Accountant, Financial Controller, Performance Monitoring Offi cers, Communications Director, Communications Officers and Legal Counsels. The insider register for CapMan Plc is held by the Finnish Central Securities Depository Ltd. A list of CapMan Plc’s insiders and their holdings of shares and stock options is updated monthly on the Company’s website at www.capman. com.
Employees of CapMan Group are not permitted to trade Company shares or stock options without the permission of the CFO. Trading is completely forbidden in the fourteen-day period prior to publication of the Company’s fi nancial results.
9. Auditor
CapMan shall have one auditor (a public accountant company or auditor) approved by the Central Chamber of Commerce, in accordance with the company’s Articles of Association. The auditor is elected by the AGM for a one-year term, which terminates at the closing of the following AGM.
CapMan Plc’s auditors PricewaterhouseCoopers Oy and auditor in charge Mr Jan Holmberg, Authorised Public Accountant, are responsible for guiding and co-ordinating the auditing work of the entire Group.
In accordance with the decision by the AGM, the auditor shall be remunerated as per the amount invoiced. The auditor’s remuneration for the 2007 financial year amounted to €128,000.
10. Risk management and internal control
Clear financial and other operative objectives are specified for all CapMan´s teams. CapMan has an internal code of practice and risk management program for the achievement of set objectives and minimisation of associated risks. Major risks are published, provided that the information does not contain confidential information pertaining to CapMan’s business.
The CFO and Head of Internal Services is responsible for drafting and updating an internal control program, which also covers the statutory control of the funds and their activities. The aim of the internal control program is to ensure that:
- authorisations for effecting payments in the Group and funds are clearly defined
- authorisations for entering into undertakings on behalf of the Group are clearly defined
- the Group and funds comply with their related obligations.
The major risks associated with CapMan’s business are the failure of fundraising and the resignation of key personnel from the company. Successful fundraising depends in the long-term on successful investment and exit activities, which in turn largely depend on the professional expertise of the personnel. CapMan strives to minimise the risks and maximise the returns associated with investments by means of deliberate investment strategies and criteria, a phased investment decision-making process and a well-diversified portfolio of investee companies. Additionally, CapMan participates actively in the business development of its portfolio companies to manage risks and grow returns, for example through work on the companies’ Boards of Directors.
11. Investor Relations and Communications
CapMan’s IR and Communications team serves the company’s various stakeholder groups by giving information about CapMan’s strategy, operations, objectives and business environment in a way that will give the correct picture of CapMan as investment and partner.
The Company’s releases, Annual Reports and share related information is presented on this Internet at www. capman.com.